Introduction

When it comes to financing higher education, understanding your loan options is crucial. A Plus Loan is a federal student loan designed to help parents and graduate students cover education costs beyond other financial aid.

In this article, we’ll explore what a Plus Loan is, who qualifies, and how it can support your educational journey without overwhelming you with confusing terms.

What is a Plus Loan?

A Plus Loan, short for Parent Loan for Undergraduate Students or Graduate PLUS Loan, is a federal loan offered by the U.S. Department of Education. It helps cover education expenses not met by other financial aid.

This loan is available to parents of dependent undergraduate students and to graduate or professional students themselves. It allows borrowers to pay for tuition, room and board, books, and other education-related costs.

• It has a fixed interest rate set by the government.

• Borrowers can request up to the total cost of attendance minus other aid received.

• Repayment typically begins after the loan is fully disbursed, but deferment options exist.

Who is Eligible for a Plus Loan?

Eligibility for a Plus Loan depends on your role and credit history. Here’s a breakdown:

• Parents of Dependent Undergraduates:

  Must be the biological or adoptive parent, or in some cases, a stepparent.

• Graduate and Professional Students:

  Can apply for a Graduate PLUS Loan independently.

• Credit Check:

  Applicants must pass a credit check showing no adverse credit history.

Unlike other federal loans, Plus Loans require this credit approval, which means a poor credit history may limit eligibility.

How Does a Plus Loan Work?

Once approved, the loan funds are sent directly to the school to cover tuition and fees. If there’s money left over, it’s given to the borrower or parent to pay for other education expenses.

Repayment usually starts 60 days after the final loan disbursement, but you can request to defer payments while the student is enrolled at least half-time.

• Interest accrues from the date funds are disbursed.

• Borrowers can choose from several repayment plans, including standard, graduated, and extended.

• Loan limits are based on the cost of attendance minus other aid.

Benefits of a Plus Loan

Plus Loans offer several advantages that make them a useful option for many families:

• Higher Borrowing Limits:

  You can borrow up to the full cost of attendance.

• Fixed Interest Rate:

  The rate remains constant throughout the life of the loan.

• Flexible Repayment Options:

  Multiple plans help manage monthly payments.

• No Prepayment Penalties:

  You can pay off the loan early without extra fees.

Considerations Before Taking a Plus Loan

While Plus Loans can be helpful, it’s important to weigh the following:

• Credit Requirements:

  A credit check is mandatory, which may disqualify some applicants.

• Interest Accrual:

  Interest starts immediately, even during deferment.

• Potential Debt Burden:

  Borrowing the full cost of attendance can lead to significant debt.

Make sure to explore all federal and private aid options before committing to a Plus Loan.

How to Apply for a Plus Loan

Applying for a Plus Loan is straightforward:

• Complete the Free Application for Federal Student Aid (FAFSA).

• Submit a separate Plus Loan application through the Federal Student Aid website.

• Undergo a credit check as part of the application process.

• If denied due to credit, consider applying with an endorser or appeal with documentation.

Once approved, you’ll need to complete a Master Promissory Note agreeing to the loan terms.

Conclusion

A Plus Loan can be a valuable tool to bridge the gap between financial aid and the total cost of education. It offers flexible borrowing limits and repayment options, making it a practical choice for parents and graduate students.

However, it’s essential to understand the credit requirements and potential debt implications before applying. By carefully considering your financial situation, you can use a Plus Loan to support your education goals responsibly.

What is the difference between a Parent PLUS Loan and a Graduate PLUS Loan?

Parent PLUS Loans are for parents of undergraduates, while Graduate PLUS Loans are for graduate or professional students borrowing for themselves. Both have similar terms but differ in borrower eligibility.

Can I get a PLUS Loan if I have bad credit?

If you have adverse credit history, you may be denied a PLUS Loan. However, you can apply with an endorser or appeal with documentation to overcome this hurdle.

When do I have to start repaying a PLUS Loan?

Repayment usually begins 60 days after the loan is fully disbursed, but you can request deferment while the student is enrolled at least half-time.

Are PLUS Loans federally subsidized?

No, PLUS Loans are unsubsidized, meaning interest accrues from the time the loan is disbursed until it is paid off.

Can I pay off my PLUS Loan early without penalty?

Yes, there are no prepayment penalties on PLUS Loans, so you can pay off the loan early to save on interest costs.